EBC Global Focus | Gold Rises, Trump Again States Preference for Negotiations

On Monday (August 3), Trump stated that airstrikes had been canceled and described the agreement involving the Strait of Hormuz and Iran's nuclear disarmament as "imminent." Oil prices fell, and gold prices rose accordingly.

Kuwait reported on Saturday that its military intercepted and destroyed several Iranian drones following an airstrike by Tehran on key infrastructure in the country's north.

Three Federal Reserve officials who dissented at last week's policy meeting and advocated for rate hikes expressed concern that inflation would remain above the 2% target if short-term borrowing costs are not raised immediately.

In the first quarter of this year, global central bank gold purchases fell to their lowest level in over 15 years for the same period, indicating that one of the main drivers of gold demand may be slowing down.

This will pose significant resistance to gold prices, exacerbating the asset's decline of 30% since its January high. However, the World Gold Council's estimates are based on incomplete disclosure information from policymakers.

Net inflows into gold ETFs remained at $8 billion in the first half of the year, mainly driven by buying interest in Asia. Nevertheless, affected by the sharp drop in gold prices, June saw large-scale net outflows from gold ETFs.

Analysts at EBC Financial Group stated that gold is showing a very clear bullish divergence. A more prudent entry timing would be to wait for confirmation of a breakout above $4,157 on the daily chart, then buy when the price pulls back to that level.

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